Company Presentation. February

Transcription

1 Company Presentation February

2 About Scorpio Bulkers Scorpio Bulkers Inc. ( Scorpio or the Company ) is a NYSE-listed Marshall Islands corporation, founded in March 2013 by the senior management team of the Scorpio Group Company currently owns 48 dry bulk Eco vessels 28 Ultramax and 19 Kamsarmax delivered to date 1 Kamsarmax delivering in 2Q-2017 Scorpio s strategy is to: Own and operate the latest generation of fuel efficient drybulk vessels purchased from quality shipyards Operate vessels in the spot market through the Scorpio Ultramax and Scorpio Kamsarmax pools under short term or long term time charters Maintain a strong balance sheet in the current difficult operating environment Scorpio has access to Scorpio Group s customer and supplier relationships as well as technical, commercial and managerial expertise 2

3 Experienced Management Team Years in industry Prior experience Emanuele A. Lauro Founder, Chairman, Director & Chief Executive Officer Robert Bugbee Founder, President and Director 13 years 30 years Member of the Lolli-Ghetti family, involved in shipping since the 1950s Joined Scorpio Group in 2003, part of senior management since 2004 Founder of several tanker pools including: Scorpio Aframax Tanker Pool, Panamax Tanker Pool and Handymax tanker pool Degree in International Business from the European Business School in London Mr. Bugbee, Co-Founder of Scorpio Bulkers, has served as President since July 2013, he also serves as President and Director of Scorpio Tankers since its IPO in April 2010 Joined Scorpio Group in February Prior to joining Scorpio Group, Mr. Bugbee was a partner at Ospraie Management LLP, and held President, Executive Vice President, Chief Operating Officer positions in OMI Corporation Holds an MBA from the Norwegian School of Economics (NHH) Cameron Mackey Chief Operating Officer 22 years Mr. Mackey has served as Chief Operating Officer of Scorpio Bulkers since July 2013, also serves as Chief Operating Officer of Scorpio Tankers since its IPO in April 2010 Previous experience includes equity and commodity analyst at Ospraie Management LLC, Senior Vice President and in Business Development at OMI Corporation M.B.A. from the Sloan School of Management at MIT, a B.S. from the Massachusetts Maritime Academy, B.A. from Princeton University and Master Mariner Hugh Baker Chief Financial Officer 24 years Joined Scorpio in July 2012, initially focusing on business development in Scorpio Tankers before taking on role as CFO in Scorpio Bulkers in July 2013 Previous experience as Managing Director of Evercore Partners in New York, Head of Shipping at HSH Nordbank in New York and Managing Director of ING Bank in London Mr. Baker has a BA from the London School of Economics and a MSc in Shipping, Trade & Finance from Cass Business School Mr. Baker is a Fellow of the Institute of Chartered Shipbrokers Filippo A. Lauro Vice President 6 years Member of the Lolli-Ghetti family, involved in shipping since the 1950s Joined Scorpio Group in 2010 as part of senior management Founder of and held senior executive roles in several private companies both in his native Italy and abroad 3

4 Higher Revenues as a result of Scorpio Pools Outperformance $14,000 Scorpio Ultramax Pool Performance Baltic Supramax Index* $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 $12,000 Scorpio Kamsarmax Pool Performance Baltic Panamax Index* $10,000 $8,000 $6,000 $4,000 $2,000 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q % of the Clarksons Average of the 6/TC Routes for Baltic Supramax Index & 4/T/C Routes for Baltic Panamax Index Q1-17 earnings for Ultramax pool represent 73% of the days Q1-17 earnings for Kamsarmax pool represent 75% of the days 4

5 Company Timeline: Raise and Preserve Liquidity (1/2) Sep-2014 Raised $65m 7.5% Sr. Unsecured Notes due 2019 Nov-2014 $150m equity private placement offering Dec-2014 Sold 1 Kamsarmax NB for ~ $31m Apr-2015 Sold 1 Kamsarmax and 3 Capesize NBs as well as 3 LR1 NBs for ~$290m Jun-2015 $200m public offering of common shares + $30m greenshoe exercise a week later Sep-2015/Oct-2015 Interest Coverage Ratio covenant waived/amended through 4Q 2017 Dec-2015 Sold 5 Capesize for ~$167m 2H 14 1H 15 2H 15 Oct-2014 UW option exercised, raised add. $8.6m 7.5% Sr. Unsecured Notes Dec-2014 Modified 6 Capesize NBs for LR2 NBs. Agreed to sell 4 LR2 to Scorpio Tankers Inc for $204m Feb-2015 Modified 3 existing Capesize NB contracts for construction of 3 LR1 product tankers Capital raises Apr-2015 Sold 2 Capesize NBs and 1 Ultramax NB for ~ $111m Vessel sales Jun-2015 Sold 3 Capesize NBs and 2 LR2 product tankers for ~ $236m Other Nov-2015 Sold 2 Capesize and 4 Capesize NBs for ~$227m Dec-2015 Executed a one-fortwelve reverse stock split to facilitate further equity issuance and ensure NYSE compliance 5

6 Company Timeline: Raise and Preserve Liquidity (2/2) Feb-2016 Termination of 4 TC-In contracts for $10 million Mar-2016 $63m public offering of common shares Apr-2016 Agreement to cancel a Kamsarmax newbuilding Jun-2016 $70m public offering of common shares Sep-Dec 2016 Reached agreements to: (i) receive a reduction in delivery price on 8 vessels by $18m in aggregate, (ii) defer delivery of 6 newbuildings by ca. 2-3 months per vessel, and (iii) eliminate management fees payable upon any future vessel purchases/disposals and reduce notice period upon vessel disposal 1H 16 2H 16 Feb-2016 Agreement reached to defer delivery of 8 newbuildings by ca. 6 months per vessel Feb-2016 Reached agreement with lenders to: (i) prepay $41.2m in exchange for deferment of principal payments of $67.9m and (ii) reduce minimum liquidity clause to >$25m and $700k per vessel May-2016 Reached agreement with lenders to: (i) amend the "interest coverage ratio" covenant under the relevant credit facilities, and (ii) reduce the "value-to-loan ratio" covenant under all of its credit facilities Oct-2016 Reached agreement with lenders to: (i) prepay $24.4m in exchange for deferment of principal payments of $48.8m and (ii) amend the "interest coverage ratio" covenant under the relevant credit facilities Capital raises Vessel sales Other 6

7 Recent Charter Employment During 2H-16 and Q1-17 Vessel Type Duration (Months) Daily Rate SBI Bravo Ultramax 4 7 $7,500 SBI Zeus Ultramax 7 9 $7,300 MV Geneva Queen Kamsarmax 7 10 $6,500 SBI Bolero Kamsarmax 5 8 $8,000 SBI Electra Kamsarmax 5 8 $8,000 SBI Lyra Ultramax 5 8 $9,500 SBI Poseidon Ultramax 5 7 $8,750 SBI Antares Ultramax 5 7 $8,900 SBI Cronos Ultramax 5 $9,000 SBI Capoeira Kamsarmax 5 7 $9,350 SBI Thalia Ultramax 5 8 $7,350 SBI Reggae Kamsarmax 5 8 $9,500 SBI Athena Ultramax 4 6 $10,000 SBI Echo Ultramax 4 6 $10,000 SBI Zumba Kamsarmax 5 7 $10,500 SBI Leo Ultramax 5 7 $9,000 SBI Cakewalk Kamsarmax 5 8 $9,000 SBI Achilles Ultramax 6 8 $11,000 SBI Pegasus Ultramax 5 7 $10,250 SBI Hermes Ultramax 6 8 $8,500 7

8 Owned Fleet List Ultramax Newbuildings # Name Year Yard 1 SBI Athena Q1-15 Chengxi 2 SBI Bravo Q1-15 Nacks 3 SBI Antares Q1-15 Nacks 4 SBI Leo Q1-15 Dacks 5 SBI Echo Q3-15 Imabari 6 SBI Lyra Q3-15 Dacks 7 SBI Subaru Q3-15 Dacks 8 SBI Tango Q3-15 Imabari 9 SBI Maia Q3-15 Nacks 10 SBI Hydra Q3-15 Nacks 11 SBI Pegasus Q3-15 Chengxi 12 SBI Ursa Q4-15 Dacks 13 SBI Thalia Q4-15 Chengxi 14 SBI Cronos Q4-15 Imabari 15 SBI Orion Q4-15 Chengxi 16 SBI Achilles Q1-16 Imabari 17 SBI Hercules Q1-16 Chengxi 18 SBI Perseus Q1-16 Chengxi 19 SBI Hermes Q1-16 Imabari 20 SBI Zeus Q2-16 Mitsui 21 SBI Hera Q2-16 Mitsui 22 SBI Hyperion Q2-16 Nacks 23 SBI Tethys Q3-16 Nacks 24 SBI Phoebe Q3-16 Chengxi 25 SBI Poseidon Q3-16 Mitsui 26 SBI Apollo Q4-16 Mitsui 27 SBI Samson Q1-17 Chengxi 28 SBI Phoenix Q1-17 Chengxi Vessel size 60,200-64,000 DWT Kamsarmax Newbuildings # Name Year Yard 1 SBI Cakewalk Q3-14 SWS 2 SBI Charleston Q3-14 SWS 3 SBI Samba Q1-15 Imabari 4 SBI Rumba Q3-15 Imabari 5 SBI Capoeira Q3-15 Hudong 6 SBI Electra Q3-15 Yangzijiang 7 SBI Carioca Q4-15 Hudong 8 SBI Conga Q4-15 Hudong 9 SBI Flamenco Q4-15 Hudong 10 SBI Bolero Q4-15 Hudong 11 SBI Sousta Q1-16 Yangzijiang 12 SBI Rock Q1-16 Yangzijiang 13 SBI Lambada Q1-16 Hudong 14 SBI Reggae Q1-16 Hudong 15 SBI Zumba Q4-16 Hudong 16 SBI Macarena Q4-16 Hudong 17 SBI Parapara Q1-17 Hudong 18 SBI Mazurka Q1-17 Hudong 19 SBI Swing Q1-17 Hudong 20 SBI Jive Q2-17 Hudong Delivered Vessels Vessels to be delivered Vessel size 82,000-84,000 DWT (1) As of January 31,

9 Overview of Lenders Our debt is held by the original lenders and remains priced between L+2.925% and L+3.00% Financial Institution Commitment (1) ($ in millions) SALT Current Lenders CEXIM $158.5 SEB $117.8 Nordea $89.7 Deutsche Bank $60.1 Credit Suisse $40.5 Credit Agricole $38.4 BNPP $28.0 NIBC $20.1 ABN AMRO $19.4 Total Committed $572.5 (1) As of February 3,

10 Remaining Capex & Delivery Obligations Agreed with the shipyard to reduce the price by approximately $2.5 million in Q Vessel Type Country Built Delivery Date Q1-17 Q2-17 Total Installments Extra Costs* Total Remaining Capex SBI Jive Kamsarmax China Q * Equipment and other technical upgrades Installments Extra Costs* Total CapEx $1.4 $17.3 $18.7 Dollars in millions 10

11 ($ in millions) Projected Quarterly Principal Repayment Schedule $20.0 Year Principal Repayments $ $16.0m 2018 $24.7m 2019 $25.3m Total $66.0m $10.0 $6.1 $6.1 $6.1 $6.1 $6.1 $6.3 $6.3 $6.3 $6.3 $6.3 $5.0 $2.7 $1.0 $- Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q

12 In compliance with all Value-to-Loan covenants Secured Credit Facilities # of delivered vessels Total 47 VTL Compliance (1) VTL Ratio VTL Test Compliance % 140% PASS % 140% PASS 4 205% 115% PASS 3 182% 140% PASS 2 237% 140% PASS 2 191% 140% PASS 1 212% 140% PASS (1) Includes the recent drawdowns for 3 vessels in January 2017 (with average vessel values from two brokers as of January 2017), and based on loans outstanding for the other 44 vessels as of December 31, 2016 (with average vessel values from two brokers as of December 31, 2016) 12

13 Overview of Dry Bulk Segments Vessel type DWT Cargo carried Handysize 10,000 40,000 Steel/fertilizers/forest/grains/soybeans/ alumina/coal/other minor bulks Handymax/Supramax 40,000 60,000 Steel/fertilizers/forest/grains/soybeans/ alumina/coal/other minor bulks Panamax/Kamsarmax 60,000 80,000 Coal/grains/soybeans/bauxite Post-Panamax 80, ,000 Coal/iron ore Capesize 110, ,000 Iron ore/coal VLOC Over 200,000 Iron ore/coal 13

14 Overview of Dry Bulk Commodity Cargoes Breakdown of Major Bulks Iron ore: primary ingredient in the production of steel, along with limestone & coking coal and is the largest single commodity shipped on dry bulk vessels. Coal: seaborne coal trade is comprised of two different types of coal; steam coal (which is used for electricity generation and industrial uses), and coking coal (which is the key ingredient for steel making). Grains: consists primarily of wheat, coarse grains (such as corn, barley, oats, and rye) and soya bean/meal. Minor bulks: include several other dry bulk goods such as phosphate rock, fertilizers, bauxite, steel products, forest products, nickel, ore, sugar, salt, and others. Breakdown of Major Bulks Grains 10% Coal 23% Iron ore 29% Minor Bulks 38% Breakdown of Minor Bulks Manufactures 40% Total Sugar 3% Total Agribulks 9% Metals and Minerals 40% Fertiliser 8% 14

15 ($/Day) Balticx Dry Index One Year Time Charter Rates Historical Data Class/Index Current Avg Max Min Feb 16 to Jan 17 Ultramax $7,563 $18,865 $66,300 $4,875 36% Panamax/Kamsarmax $8,781 $21,318 $79,375 $5,363 39% Baltic Dry Index 907 2,657 10, % $90,000 12,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 10,000 8,000 6,000 4,000 $20,000 $10,000 2,000 $0 0 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Ultramax Panamax/Kamsarmax BDI Time charter rates and BDI have recovered from record low in February 2016 Source: Clarksons Research Services, February

16 ($ Millions) Dry Bulk Asset Values $70 Q Ultramax: $48.0 Kamsarmax: $53.7 $60 $50 $40 Q Ultramax: $18.3 Kamsarmax: $20.5 Jan-2017 Ultramax: $22.25 Kamsarmax: $24.5 $30 $20 $10 Avg Ultramax: $28.8 Kamsarmax: $32.4 $0 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Panamax/Kamsarmax Ultramax Source: Clarksons Research Services, February

17 Million Tonnes Dry Bulk Seaborne Demand Iron Ore Coal Grains Minor Bulks Total Dry Bulk CAGR 6.4% 4.3% 5.3% 3.8% 4.8% 5,000 4,000 3,854 4,101 4,340 4,584 4,819 4,820 4,884 4,979 3,428 3,000 2,000 1, (f) Iron Ore Coal Grain Minor Bulks Source: Clarksons Research Services, February

18 Ton Miles (Billions) Ton Miles (Billions) Ton Miles (Billions) Ton Miles (Billions) Ton Mile Demand Iron Ore Coal 9,000 8,000 7,000 6,000 5,365 5,852 6,336 6,718 6,931 7,531 7,576 8,035 8,359 6,000 5,000 4,000 3,440 4,047 4,315 4,833 5,033 5,223 4,934 4,903 4,910 5,000 4,000 3,000 3,000 2,000 2,000 1,000 1, (f) (f) Grain Total Dry Bulk 4,000 3,500 3,000 2,500 2,221 2,460 2,404 2,594 2,794 3,002 3,301 3,376 3,512 30,000 25,000 20,000 18,611 21,098 22,435 23,768 24,933 26,314 26,557 27,133 27,735 2,000 15,000 1,500 10,000 1, , (f) Source: Clarksons Research Services, February (f) 18

19 DWT (Millions) Dry Bulk Fleet Growth Before Scrapping Current VLOC Capesize Panamax Handymax Handysize. Assumes no slippage, cancellation or scrapping Includes VLOC Newbuildings on order Source: Clarksons Research Services, February

20 Bulker Fleet Age Profile 100% 80% 6% 6% 7% 5% 13% 9% 12% 13% 15% 15% 10% 10% 60% 41% 27% 33% 36% 40% 20% 36% 39% 38% 30% 0% Capesize Panamax Handymax Handysize 0-4 yrs 5-9 yrs yrs yrs 20+ yrs Source: Clarksons Research Services, February

21 DWT (Millions) (Avg Scrap Age) Scrapping Increasing, Average Age Scrapped Decreasing Scrapped (mdwt) Avg Age YTD Capesize Panamax Handymax Handysize Avg Scrap Age Source: Clarksons Research Services, February

22 Ballast Water Treatment Systems The IMO s Ballast Water Convention is due to enter force on September 8, BWTS Filtering Unit After September 2017, ship operators will need to install type-approved ballast water treatment systems by the time the International Oil Pollution Prevention (IOPP) certificate falls due for renewal, typically at Special Survey. Ballast water is used to stabilize vessels and ensure structural integrity. It is typically pumped in while cargo is being unloaded, and discharged while cargo is being loaded. Water taken on in one ecological zone and released into another can result in the introduction and spread of aquatic invasive species, many of which can have serious ecological, economic and public health effects if transferred to regions where they are not native BWTS Piping in Engine Room Ballast water treatment systems actively remove, kill and/or inactivate organisms in the ballast water prior to discharge. Ballast water treatment systems are expected to cost $500,000 to $1.5 million and depends on the type and size of vessel. Retrofits on older, existing ships, can be more challenging and expensive as they were designed without the space in the engine room. 22

23 New Sulfur Emission Regulations On October 27, 2016 the International Maritime Organization's (IMO) announced the results from a vote to ratify and formalize regulations mandating a reduction in sulfur emissions from 3.5% currently to 0.5% as of the beginning of MARPOL Annex VI SOx Emission Timeline Ship owners will have to decide between: 1. Installing a scrubber so the vessel can continue to burn HFSO; or 2. Paying the premium to consume MGO with a sulfur content < 0.5% The cost of the scrubber depends on the size and type of ship but is estimated to cost $4-$10 million. Refineries that currently produce traditional fuel oil in areas such as Russia, Mexico, Venezuela, Iraq, and Iran are unlikely to have enough capital to upgrade refineries, resulting in the need to more blended fuel. Increase in scrap rate as the cost to equip older tonnage with scrubbers can exceed the scrap value of the vessel. $1,200 $1,000 $800 $600 $400 $200 Historical FO & MGO Prices ($/MT) 1 Modern fuel efficient ships have a competitive advantage over older tonnage through lower fuel consumption. $0 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Rotterdam Singapore Houston Source: Ocean Connect, February

24 Recent Growth in Industrial Production record electricity production; steel production strength manufacturing surge, steel production strength manufacturing surge, electricity production rebound steel production rebound steel production rebound Source: Commodore Research & Consultancy: January

25 January s Estimated Change in Chartering Demand Source: Commodore Research & Consultancy: January

26 Short Term Negative Global Headwinds Source: Commodore Research & Consultancy: January

27 Seaborne Coal Trade through mt 1190mt 1120mt 1110mt 1170mt 1000mt 950mt * Projection (high and low scenarios shown) Source: Commodore Research & Consultancy: January

28 Seaborne Grain Trade through mt 595mt 510mt 535mt 545mt 535mt 520mt * Projection (high and low scenarios shown) Source: Commodore Research & Consultancy: January

29 Chinese Coal Market Analysis Domestic coal output fell in 2016 by 8%; there still has yet to be a month since Dec 2014 that has seen y-o-y growth in coal output Domestic coal is of inferior quality with lower energy content and creates more air pollution for less benefit Accidents continue to limit mining due to stoppages / inspections Recent Coal Mining Fatalities Qitaihe mine (Nov 29, 2016) Baoma mine (Dec 3, 2016) Shuozhou mine (Jan 17, 2017) Xingyu mine (Jan 4, 2017) Xinja mine (Dec 5, 2016) Source: Commodore Research & Consultancy: January

30 (Yr/Yr Growth) (Yr/Yr Growth) Chinese Electricity Production & Thermal Coal Demand The rebound in China s electricity production is being driven by thermal coal-derived electricity generation Chinese Electricity Production 16 Chinese Coal Derived Electricity Generation 16 Source: Commodore Research & Consultancy: January

31 South American Grain Cargoes South American spot grain cargo volume last month jumped by 120% from December s volume Compared to January 2016, last month s volume rose by 100% Weekly South American Spot Grain Cargoes Source: Commodore Research & Consultancy: January

32 South American Grain Exports Brazilian soybean exports are expected to be particularly robust going forward 2016/17 exports are expected to total a record 72.5 million tons Brazil Soybean Exports (Incl Soybean meal) 2016/2017 Projections Source: Commodore Research & Consultancy: January